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Reports about a potential mega-buyout of mobile phone operator EE worth about £10bn have re-emerged this week – in what would be Europe’s biggest leveraged buyout since the boom era.

Apax Partners and Kohlberg Kravis Roberts have been named in one camp, with CVC Capital Partners and Blackstone Group in another. All the firms have gone to ground on the issue, but bankers and advisers are keen to discuss what could be a return to the big time for private equity.

But there are various challenges that would face buyout firms hoping to complete such a large deal. Here Financial News lists five potential stumbling blocks.

1) Finding the debt
Reports have said a debt package of about £7bn would be required and two bankers told Financial News that such a deal made sense given the state of the debt markets, provided the firms could access the highly buoyant US high-yield market. One said: “If they are going to try it now is the time.”

However, this would be dependent on the firms finding a strong US angle for the business, which runs Orange and T-Mobile in the UK. European debt markets are also busy, but nothing close to a £10bn buyout has been attempted.

2) Finding enough equity
Supposing £7bn of debt could be gathered together for the deal, sponsors would still have to cough up £3bn of their own cash. Looking at the mooted Apax and KKR bid, Apax Partners raised €4.3bn in its first close of its €9bn fundraising last year. Even if it were to raise €9bn – which is proving difficult – the typical limit from a fund on one investment is 10%, meaning it would have an absolute maximum of €900m to invest from that fund.

KKR had $2.9bn remaining in its latest European fund by the end of the third quarter, but given the fund raised in 2008 is a total size of $6bn it would have only about $600m to invest from that fund. Supposing the two could put in a combined £1bn it would mean their other funds and co-investors would be required to stump up the remaining £2bn – a significant sum. Blackstone and CVC may have more firepower but the sums involved would still be a challenge.

3) Selling the location
Europe still has a stigma attached to it in the US, which could cause problems for potential co-investors and debt investors on a big deal. While the continent has enjoyed a relatively stable period over recent months, many of the fundamental issues it faces have yet to be resolved for the long-term and any new bad news stories could easily derail such a bid.

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4) Getting things moving
People with knowledge of the situation have played down any talk of a bid based on the fact that there is no sale process going on and that rumours have been circulating for so long. In June last year, The Sunday Times wrote that KKR and Apax were interested in an £8bn offer for the business. With few developments in the following six months, the story was disregarded by many but it was picked up again yesterday by the Financial Times, which also mentioned that Blackstone and CVC were interested in raising the debt required for a deal worth £10bn. Although some new names have emerged, little else has changed since the first report last year.

5) Dealing with market uncertainty
Debt and equity markets are notoriously changeable. While US buyout firm Silver Lake Partners has successfully backed a $24bn buyout of computer giant Dell this week, there is no certainty that such appetite would still be around in a few weeks or months’ time. Conversely, reports have also suggested EE might look to list on the public markets, which could prove a more attractive option to owners Deutsche Telekom and France Telecom should there be a market rally.